THE EXTRACTOR

For Pete Patterson and his Vitalis Extraction Technology co-founders, James Seabrook and Joel Sherlock, what interested them about the cannabis industry wasn’t necessarily the plant itself. It was the diversity of products or, more accurately, the process that could churn them out.

Kelowna-based Vitalis incorporated in early 2016 and had 50 staff as of late September; Patterson estimates it will hit 75 by Christmas. But not a single employee touches cannabis (at least while they’re working).

Patterson and his partners were private investors in the legal marijuana space through a private equity fund when they saw a big demand for manufacturing equipment to extract cannabinoids from the plant. “Rather than just smoking a joint, extracts are used for basically everything else,” he explains. “Whether it’s patches or pills or dissolving strips you can take orally or vaporizing pens, there are myriad different products that can be made with extracts.”

When the trio first tried to get into the extraction market, they noticed that all the machines that companies were buying were quite small. So they took a page from Blue Ocean Strategy, a popular 2004 book by W. Chan Kim and Renée Mauborgne, who argue that businesses can succeed by creating uncontested market space.

“We decided to make much larger equipment than what everyone else was making,” Patterson recalls. “Our big, commercial/industrialscale extraction system has given us really good position in the market. We were doing one machine a week; now it’s two a week. We just picked up another 10,000 square feet of space so we can continue to manufacture more, and doubled our floor staff.” The business now serves customers on three continents.

For companies like Vitalis, being in the cannabis industry is much like any other line of work, Patterson insists. “If you look at the fundamentals, 80 percent of our business is manufacturing, marketing, sales; it’s quite standard. It’s just that last 20 or 15 percent that’s cannabis nuances.”